FOMC Minutes

Meeting of Federal Open Market Committee July 17, 1973 MINUTES OF ACTIONS A meeting of the Federal Open Market Committee was held in the offices of the Board of Governors of the Federal Reserve System in Washington, D. C., on Tuesday, July 17, 1973, at 9:30 a.m. As indicated below, only a limited number of staff members were in attendance during the first part of the meeting. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Burns, Chairman Hayes, Vice Chairman Balles Brimmer Bucher Daane Francis Holland Mayo Morris Sheehan Messrs. Clay, Kimbrel, and Winn, Alternate Members of the Federal Open Market Committee Messrs. MacLaury and Coldwell, Presidents of the Federal Reserve Banks of Minneapolis and Dallas, respectively Mr. Broida, Secretary Mr. Altmann, Assistant Secretary Mr. O'Connell, General Counsel Mr. Partee, Senior Economist Mr. Axilrod, Economist (Domestic Finance) Messrs. Bryant and Reynolds, Associate Economists Mr. Sternlight, Deputy Manager, System Open Market Account Mr. Coombs, Special Manager, System Open Market Account 7/17/73 Mr. Melnicoff, Deputy Executive Director, Board of Governors Mr. Coyne, Assistant to the Board of Governors Mr. Gemmill, Advisor, Division of International Finance, Board of Governors Messrs. Willes and Black, First Vice Presidents of the Federal Reserve Banks of Philadelphia and Richmond, respectively By unanimous vote, the System open market transactions in foreign currencies during the period June 19 through July 16, 1973, were approved, ratified, and confirmed. By unanimous vote, renewal for further periods of 3 months of System drawings on the National Bank of Belgium, the Swiss National Bank, and the Bank for International Settlements, maturing in the period August 2-23, 1973, was authorized. The following then entered the meeting: Mr. Bernard, Assistant Secretary Messrs. Andersen, Eisenmenger, Gramley, Scheld, and Sims, Associate Economists Mr. Feldberg, Secretary to the Board of Governors Mr. O'Brien, Special Assistant to the Board of Governors Messrs. Keir, Wernick, and Williams, Advisers, Division of Research and Statistics, Board of Governors Mr. Struble, Senior Economist, Government Finance Section, Division of Research and Statistics, Board of Governors Mrs. Ferrell, Open Market Secretariat Assistant, Office of the Secretary, Board of Governors Mrs. Peters, Secretary, Office of the Secretary, Board of Governors Messrs. Boehne, Taylor, and Doll, Senior Vice Presidents, Federal Reserve Banks of Philadelphia, Atlanta, and Kansas City, respectively Messrs. Davis, Hocter, and Green, Vice Presidents, Federal Reserve Banks of New York, Cleveland, and Dallas, respectively Mr. Meek, Monetary Adviser, Federal Reserve Bank of New York Mr. Broaddus, Assistant Vice President, Federal Reserve Bank of Richmond Mr. Rolnick, Economist, Federal Reserve Bank of Minneapolis By unanimous vote, the action of members of the Federal Open Market Committee on July 6, 1973, increasing from $2 billion to $3 billion the limit specified in paragraph 1(a) of the authorization for domestic open market operations on net changes between Committee meetings in System Account holdings of U. S. Government securities and agency issues, for the period through the close of business on July 17, 1973, was ratified. By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee held on May 15, 1973, were approved. The memorandum of discussion for the meeting of the Federal Open Market Committee held on May 15, 1973, was accepted. By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' acceptances during the period June 19 through July 16, 1973, were approved, ratified, and confirmed. 7/17/73 With Mr. Francis dissenting, the Federal Reserve Bank of New York was authorized and directed, until otherwise directed by the Committee, to execute transactions for the System Account in accordance with the following domestic policy directive: The information reviewed at this meeting, including recent developments in industrial production, employment, and retail sales, suggests that growth in economic activity moderated in the second quarter from the exceptionally rapid pace of the two preceding quarters. Increases in employment were relatively substantial, however, and in June the unemployment rate dropped below 5 per cent. Wage rates advanced at a faster pace during the second quar ter than earlier in the year. In the months immediately preceding the price freeze imposed in mid-June, the rise in prices of both industrial commodities and farm and food products remained extraordinarily rapid. The U.S. merchandise trade balance worsened in May as import prices rose sharply further, but the trade deficit remained well below the first-quarter average. In foreign exchange markets, the jointly floating continental European currencies rose sharply further against the dollar in early July. After the first week in July, the dollar recovered somewhat on the basis of market expectations of official intervention. On July 10 the Federal Reserve announced substantial increases in its swap arrangements with other central banks. Both the narrowly and more broadly defined money stock rose sharply in May and June, although inflows of consumer type time and savings deposits slackened somewhat in the latter month. Expansion in bank credit continued at a substantial pace. Since mid-June both short- and long-term market interest rates have advanced considerably further, with the sharpest increases in the short-term sector. On June 29 increases were announced in Federal Reserve discount rates, from 6-1/2 to 7 per cent, and in member bank reserve requirements; on July 5 ceiling interest rates were increased on time and savings deposits at commercial banks and other thrift institutions. -5 7/17/73 In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster financial conditions conducive to abatement of inflationary pressures, a more sustainable rate of advance in economic activity, and progress toward equilibrium in the country's balance of payments. To implement this policy, while taking account of international and domestic financial market developments and the forthcoming Treasury financing, the Committee seeks to achieve bank reserve and money market conditions con sistent with slower growth in monetary aggregates over the months immediately ahead than occurred on average in the first half of the year. It was agreed that the next meeting of the Federal Open Market Committee would be held on Tuesday, August 21, 1973, at 9:30 a.m. The meeting adjourned. Secretary

Federal Reserve (1973, July 16). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19730717

@misc{wtfs_fomc_minutes_19730717,
  author = {Federal Reserve},
  title = {FOMC Minutes},
  year = {1973},
  month = {Jul},
  howpublished = {Fomc Minutes, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/fomc_minutes_19730717},
  note = {Retrieved via When the Fed Speaks corpus}
}